Matching Risk to Capital
Across the insurance industry, businesses either need capital, have too much capital, or are not managing their capital efficiently to support business goals. Finding the right balance between risk and capital requires careful planning and strategic decision-making.
Importantly, insurers also need access to many forms of capital, including debt, equity, traditional treaty and facultative reinsurance, legacy capital, alternative capital and parametric sources, to successfully navigate current market conditions while managing increased volatility and higher risk retentions.
While investors are concerned about climate change and inflation, they are also focused on margin improvements from price increases and rising interest rates. At Aon, we partner with insurers to develop innovative ways to match risk to capital, fostering both short-term wins and long-term sustainability.
How Aon Can Help
Matching risk to capital is what we do. We complement traditional reinsurance services, including treaty, facultative and parametric covers, with alternative capital sources and advise clients on options that will work most efficiently and effectively for their business.
Additionally, our global market relationships mean we can create capacity and innovative solutions to address existing and emerging threats, from natural catastrophes to growing systemic risks.
Highlights of our work with clients include Aon's Marilla facility for automatic capacity, catastrophe bond transactions to provide countries with financial protection against catastrophes, stabilizing the U.S. housing market with mortgage credit risk transfer and driving the emerging MGA and program market to provide new sources of diversifying capacity.
How We Work With Clients
Our practice has evolved from an execution-focused partner to a full-service capital advisor, using our scale and data and analytics capabilities to fuel innovative deal structures. We inform and advise clients on how they can achieve their capital strategies and manage earnings volatility.
Critically, our comprehensive approach considers the volatility of returns, which is vital to optimizing the long-term return on capital.
15+
Aon advocates for 15+ global lines of business, including: accident & health, agriculture, aviation, casualty, construction, contingency, cyber, commercial auto, credit, marine & energy, life, professional liability, property, retro, fidelity & surety, terrorism, workers' compensation.
Process Snapshot
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Technical Study
Our work begins by conducting a technical analysis of your target capital needs and the value of each form of capital measured by ceded return on equity (ROE).
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Opportunity Identification
We work closely with clients to understand their perspectives on various capital sources and then gather intelligence to match client and market appetites for deals.
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Deal Execution
Once target actions and opportunities are identified, we use proven tactics and methodologies to execute on behalf of clients across all capital channels.
Why Work with Aon
At a time when reinsurance has never been more valuable in responding to catastrophes and managing volatility, we focus on the following:
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Integrating Reinsurance into Broader Decision Making
Integrating reinsurance into broader decision-making and aligning capital solutions to insurers' specific industry segments.
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Collaborating with Facultative and Treaty Reinsurance
Collaborating with facultative and treaty reinsurance, along with alternative channels, to find optimal capital placement options.
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Going Beyond Transaction Support
Going beyond transaction support to optimize your balance sheet, manage investor concerns and support growth through complete capital advisory services.
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Offering Value-Add Services
Offering value-add services, including expert underwriting, placement of new debt and equity issues, and financial and strategic advice, along with our leading secondary trading desk, Aon Securities, one of the most experienced investment banking firms in the insurance-linked securities market.
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Delivering Data-Driven Insights
Delivering data-driven insights underpinned by proprietary catastrophe (Impact Forecasting) and capital modeling (ReMetrica, Tyche) platforms, coupled with actuarial insight from Aon’s strategy and technology group to optimize profitability, enable growth and manage volatility.
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Digital Trading for Real-Time Data
We collaborate with reinsurer partners through Aon’s treaty placing portal, ABConnect Placements, so that real-time data can be evaluated to help clients make informed placing decisions. Plus, Fac Digital Trading is used to send facultative quote submissions to reinsurance markets on behalf of Aon’s insurance clients.
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Advocating for 15+ Lines of Business
Capital advocates for more than 15 global lines of business, including:
- Accident & Health
- Agriculture / Crop
- Aviation
- Casualty
- Construction
- Contingency
- Cyber
- Commercial Auto / Motor
- Credit
- Marine & Energy
- Life
- Professional Liability
- Property
- Retro
- Fidelity & Surety
- Terrorism
- Workers' Compensation
$58B
Aon placed a $58 billion in reinsurance limit, with $4.4 billion in premium paid and $8 billion in projected lifetime premium, for the government subsidized entities (GSEs) Freddie Mac and Fannie Mae.
By the Numbers
By partnering with Aon, you'll gain access to scale and insights spanning the full range of capital sourcing options.
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$54B
In 2022, Aon placed $54 billion in treaty reinsurance premium. $4.5 billion in facultative premiums were also placed.
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$43B
Over the last 10 years, Aon Securities has issued $43 billion in catastrophe bonds, representing 49% of the market.
